Siddaramaiah stresses need for special GST fund to offset losses

Chief Minister Siddaramaiah on Thursday urged the 14th Finance Commission to provide a higher, 40 per cent allocation to States from Central taxes, and to share its cess and surcharges that are over three years old.

States are at present entitled to 32 per cent of Central taxes.

“We earnestly request the commission to restore the primacy of statutory transfers and provide to increase States’ share in Central taxes from 32 to 40 per cent,” Mr. Siddaramaiah, who holds the Finance portfolio, urged the six-member commission, led by its Chairman Y.V. Reddy. Accompanied by senior Ministers and bureaucrats, Mr. Siddaramaiah presented the State’s memorandum to the commission over a four-hour interaction.

The Chief Minister called for fixing a minimum threshold level of resources that should be compulsorily transferred to States. So far, actual transfers from the Centre had been lower than what was recommended by earlier commissions, he argued.

He also observed that Karnataka’s share of taxes had declined from 5.4 per cent to 4.33 per cent since the 6th Finance Commission.

While the commission, according to informed sources, has asked for clarification on the State’s overall resource requirement, the State has pegged its expenditure on infrastructure, social welfare, agriculture and horticulture at Rs. 16,000 crore, and Rs. 50,000 crore for completing its irrigation projects.

He called for revising the norms for Disaster Relief Fund and allocating 1 per cent from the divisible pool for this fund.

A press release issued by commission Secretary A.N. Jha said it would finalise its recommendations by October 2014, after completing discussions with all State governments, the Centre and relevant stakeholders.

Disaster relief

“There is a need for revising the debt ceiling to enable full utilisation of sustainable debt potential of such States. Our expectation from the Finance Commission is to propose a paradigm shift in the fiscal consolidation roadmap,” the Chief Minister said.

According to Mr. Siddaramaiah, the State is expected to suffer revenue loss under the proposed GST (Goods and Services Tax) regime; it had to be given adequate grants under a GST compensation fund.

Another factor to be considered for weightage in fund allocation was its record in empowering local bodies.

During its three-day visit, the commission interacted with representatives of political parties, panchayati raj institutions, urban local bodies and trade and industry associations. It is slated to visit Chickballapur on Friday before returning to Delhi.